Yacht Sinking

Photo of the sinking of the motoryacht “Yogi” by the Hellenic Coastguard

In January 2013 Duncan Swanson and Tom Becker launched Oceanskies as an independent marine and aviation consultancy specialising in the registration and documentary support of yachts, aircraft and their crew.

Together they have over twenty years of experience as licensed fiduciaries establishing and acting as director for corporate yacht and jet ownership structures on behalf of clients.  During those years they have registered over seven hundred yachts and established ownership and VAT mitigation structures in various onshore and offshore jurisdictions.

In creating Oceanskies the founders decided that they themselves would no longer form corporate structures or act as director and trustee of such structures and that instead they would use their knowledge and experience to assist other providers of such services specifically in the field of the marine and aviation requirements of High Net Worth Individuals.

Therefore Oceanskies is not a licensed fiduciary but an independent consultancy, not linked to any offshore trust and financial service based institution, Oceanskies is able to support fiduciaries and wealth managers who do not ordinarily or regularly act in marine or aviation related matters on a non-compete and partnership basis.

In addition to providing fiduciaries and wealth managers with support in the acquisition, operation and eventual disposal process Oceanskies is also on hand to provide ad hoc or regularly scheduled reviews of yachts that are already held in structures administered by the professional service providers.

This note provides background to some of the benefits of a yacht review and how the review is carried out.

The Yacht Review

The yacht review provides an opportunity to identify, document and reduce any risks to which the fiduciary or wealth manager is subject through the provision of corporate ownership and employment services for yachts on behalf of its clients.

It also provides an opportunity for the fiduciary or wealth manager to increase its understanding of its client’s nautical affairs and enhance the relationship. In certain cases it may also be possible to identify cost or operational benefits that may add considerable value to the relationship.

The assurance that the yacht review process will provide combined with the on-call back up of Oceanskies will enable the fiduciary or wealth manager to confidently provide and offer marine services to their existing clients, and potential future clients.

The Risks of Yacht Ownership

The yacht review seeks in particular to address the two most significant areas of risk associated with yacht ownership, namely:

1. The risk of accident leading to loss of life, injury or any other event that could lead to criminal or litigious action against the Directors of the yacht owning company; and

2. The risk to a client relationship in the event of an incident involving the yacht that could have been reasonably foreseen and prevented by the Directors of the yacht owning company.

These areas of risk should not be underestimated. Although events of an accidental nature are fortunately very rare the yachting industry has in recent years faced a number of cases whereby yachts have sunk or have had incidents onboard leading, in some cases, to actual loss of life and/or serious injury.

When an event of a serious nature occurs the flag state responsible for the yacht will initiate accident investigation proceedings which in part will scrutinize the actions of the registered owners who hold overall legal responsibility.

By way of example, the marine accident authorities have in recent years investigated at least two Guernsey yacht owning companies following serious accidents and their respective reports have been well documented and reported in the media.

In one case a motor yacht caught fire and sank whilst on charter, fortunately without loss of life or injury. In another case a young crewmember was killed in a tragic accident resulting from a breach of procedures and faulty equipment.

Although these are extreme examples a less severe breach of flag state or local regulations applying to a particular vessel can lead to its detention by Port State Control which in turn can lead to inconvenience, embarrassment and expense if a client’s holiday or a third party charter is delayed or even cancelled as a result.

Similarly any breach of fiscal regulations such as the incorrect handling of the payment, or otherwise, of VAT on the value of a particular yacht can lead to serious inconvenience, embarrassment and expense.

The Yacht Review Process

The yacht review is wide-ranging and specific to each yacht and the fiduciary or wealth manager’s policies and procedures.

Firstly, Oceanskies would enter into a confidentiality/non disclosure agreement with the professional services provider. In order to complete its review Oceanskies only requires details of the place of establishment/residence of any user of the yacht and does not require any personal details of these individuals.

The review typically covers a yacht’s:

  • structure and usage;
  • VAT/sales tax paid status;
  • ownership documentation proving ownership and the chain of title;
  • registration, representative person and radio license requirements;
  • operational status and resulting compliance requirements;
  • manning levels; and
  • compliance with flag state, port state and insurance requirements.

It can also cover any other areas of specific concern the fiduciary or wealth manager, or their client, may have.

Once the report is produced Oceanskies remains available to discuss any identified risks or areas of concern with the professional services provider. Oceanskies can then also provide an indication of costs for ongoing support, if required, to manage these risks that can be taken to the market to source these services independently.Oceanskies’ ongoing support can either be provided directly with the professional service provider or directly with the client and/or crew with the professional service provider receiving a copy of all correspondence.

Fees

The independent yacht review is charged on an hourly basis at GBP £125.00 per hour. Once Oceanskies has entered into a confidentiality/non-disclosure agreement with the fiduciary or wealth manager and briefly reviewed the files held for the yacht it will be able to provide an estimate for the completion of the review, to include a meeting with the professional services provider to discuss the content of the review.

In the case of an under 24m privately operated motor yacht in a simple offshore company structure we would estimate the review to take four hours.

Next Step

Please contact Duncan Swanson or Tom Becker at Oceanskies for further information or complete our yacht enquiry form to request a free no obligation quotation from Oceanskies to provide a bespoke Yacht Review:

Click Here for Yacht Enquiry Form

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Guernsey Office

Oceanskies Limited

Castle Emplacement

St. Peter Port, Guernsey GY1 1AU

Channel Islands, Great Britain

Malta Office

Oceanskies (Malta) Limited

43A/1 Saint Paul's Buildings

West Street, Valletta VLT 1532

Malta

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